Direxion Shares Exchange Traded Fund Trust is not likely to see any decent gains for the remaining sessions this week. In fact, it is most probable that the ETF will be trading in a range as gold starts consolidating previous gains before it builds enough momentum to break out above the psychological barrier at $1300.
On Monday, the bullion touched $1,303.60 an ounce to mark its highest level since January 2015; however, the yellow metal has not found it very easy to hold on to those gains. This morning, gold gave back some of the gains from the previous sessions as the U.S. dollar casts off its lethargy to obtain strength against the Yen and other currencies.
Gold has been enjoying a rally that has left even the most bullish investor amazed – the yellow metal is up more than 20% in the YTD and it was the best performing commodity in the market in the first quarter.
Dollar finds strength against Yen
This morning gold seems to have slowed down from its previous ascent and the Direxion Shares Exchange Traded Fund Trust is not likely to book much gains. Spot gold was down 0.7% to $1,277.20 an ounce in Europe this morning. Bullion for June delivery was down 12% to $1,289.90 an ounce. The Euro and Yen gave back some of the recent gains that they have recorded against the dollar. More so, the USD is finding strength head of economic data such as the U.S. jobs number due on Friday.
However, the fact that the yellow metal is slowing down today does not necessarily mean that an end has come for the yellow metal. Deutsche Bank analyst Michael Hsueh opines that “We haven’t really stepped off from the idea that the dollar has further to go on the upside, and that should probably take some of the steam out of gold.”
Analysts at HSBC also support the bullish sentiment about the prospects of the yellow metal going forward. The analysts noted that “the difficulty gold is experiencing in staying above $1,300 does not necessarily mean the bull rally is ending. But the rally may be tired and in need of consolidation. This can trigger profit-taking,”
Gartman thinks $1,500 an ounce is realistic for gold
Some analysts are becoming quite vocal on their bullish thesis on the yellow-metal and ETFs tracking gold such as the Direxion Shares Exchange Traded Fund Trust . Dennis Gartman, editor of The Gartman Letter told CNBC that the bullion is in a bull market and that it could end the year with 10% to 15% gains from its current prices.
Gartman opines that the fundamentals are still bullish for gold with respect to economic policies from central banks. He says, “I think the monetary authorities around the world, with the exception of the United States, are continuing to err on the side of easier monetary policies.” He went ahead to say, “if the monetary authorities are in fact easing … that could still make the case for a stronger stock prices and for stronger gold,”